Strata corporations across Sydney will be able to decide for themselves whether to ban Airbnb from their apartment blocks, under new rules announced by the NSW government on Tuesday.

However, owners and tenants living in a property are free to do as they please – even if their strata committee passes bylaws banning Airbnb. They will be able to rent out rooms within their home or place their apartment on short-term letting sites while they go on holidays.

The NSW government also announced it would be regulating the short-term letting service by way of a 180-night limit on the number of nights a property can be rented out on sites like Airbnb and HomeAway each year.

Airbnb Photo: Supplied

The 180-night limit will apply to houses and apartments in Sydney, Newcastle and Wollongong. When the host – either the owner or a tenant – is present the limit does not apply.

Properties in regional areas of NSW will also be exempt, however councils outside Greater Sydney will have the power to implement the 180-day cap.

Minister for Innovation and Better Regulation Matt Kean said the government would impose a two-strike rule for those “breaching the code of conduct”.

The two-strike rule would be valid for a period of two years and those who break the rules will be banned from using short-term letting sites for five years.

“Our plan will allow local economies to thrive while at the same time cracking down on bad behaviour,” he said. “These will be the toughest laws in the world”.

Mr Kean said the mandatory code of conduct would address concerns about noise levels, disruptive guests and the impact short-term letting had on shared neighbourhood amenities.

The announcement comes two weeks after the government had to delay the long-awaited reforms, after backbenchers refused to support the initial policy which proposed the 180-day cap but gave no power to strata committees.

“This has been a complex issue, we’ve been grappling with how to regulate this industry for a little over two years, there was a parliamentary inquiry, an options paper…and generally a diversity of opinion not just across the community but across the party room,” Mr Kean said Tuesday.

“I’m confident that our reforms…have got the balance right between protecting people’s property rights, between recognising that owners corporations have a role to play in the governance of strata schemes and ensuring that people that want to use these platforms like Airbnb are able to do so.”

Chris Lehane, Airbnb’s head of global policy and communications, welcomed the government’s announcement and said it deserved enormous credit for coming to an agreement.

” I think they’ve taken an approach that’s designed to balance [different] interests and I think ultimately they’re taking a fair, forward-looking and progressive approach,” Mr Lehane said.

“I also think it has the potential to be a model out there for others to potentially take a look at because it specifically looks to the future and how people are engaging in the world,” he said.

While the government said its two-strike rule would be “the toughest in the world”, its cap is arguably the most generous compared to other popular Airbnb markets.

It’s 60 days longer than Paris, 90 days longer than London and a whopping 150 days longer than Amsterdam, which will halve its limit down to 30 nights a year in 2019.

There are 55,000 Airbnb listings in NSW, which is one of the biggest markets in the world for the global short-term letting company.

Mr Lehane said while he would prefer people to be able to rent their properties for 365 days of the year he understood the government’s 180-night cap.

Airbnb didn’t agree that their business was exacerbating Sydney’s high rental prices.

“The number of full time listings on Airbnb represents less than 0.1 per cent of the overall housing stock” Sam McDonagh, Airbnb’s country manager for Australia and New Zealand, said.

“Which by definition means it’s not having a material impact,” Mr Lehane added.

NSW Tenants Union policy officer Leo Patterson Ross said the cap of 180 days was not enough to dissuade investors from renting their properties on platforms like Airbnb instead of offering them up on longer-term leases to those struggling on Sydney’s rental market.

He said the NSW government number defied international experience, research and even the union’s data that recommend a 60-day cap instead.

“The 180-day limit is far too long. You can let out your place every night in summer and well into spring,” Mr Patterson Ross said.

He said it would only get worse for people in regional areas where there was no cap on the number of days a home could be rented out.

“All along the coast tenants are given six or nine months leases and are evicted to put people through the summer,” he said.

Dr Laura Crommelin, from the City Futures Research Centre at UNSW, was curious as to how these new rules would be enforced.

“I’d like to see a lot more information on how this code of conduct will be applied and whether any responsibilities will be placed on the platforms. The onus is still on the hosts,” she said.

The announcement doesn’t explain whether Fair Trading will be given additional resources to police the legislation.